Affordable Care Act

Affordable Care Act
August 24, 2016 Unland

Healthcare has seen many changes over the decades – none more significant than the Affordable Care Act (ACA). Unfortunately, the ACA hasn’t gone off without a hitch, least of all for small business owners.

How is the Affordable Care Act affecting small business owners?

Since its creation, new tax penalties have been brought into action by the ACA in an effort to enforce compliance. However, these penalties are still largely unknown and greatly misunderstood, even by small business tax advisors. This poses a serious problem for small business owners seeking to be compliant with new laws when they file their 2014/2015 federal income tax returns. Even more unfortunately, several insurance firms are even taking advantage of the situation, marketing non-compliant solutions and products through online media, resulting in more unnecessary penalties for small business owners.

Why are there so many penalties during this transition?

While it’s a safe conclusion that the Department of Labor and the Internal Revenue Service have failed to effectively communicate the details of new ACA laws, the IRS believes that enforcing tax penalties is the best way to increase communication and compliance.

What happens if I unknowingly fail to comply?

While the tax penalties are generally severe for compliance failure, the law contains provisions for small businesses that do so unintentionally. The first tax penalties will be addressed in spring 2015 as business owners begin to file their 2014 returns.

What are the most common ACA compliance failures?

Among the most common compliance errors are:

  1. Reimbursing expenses paid out-of-pocket when the employee is not on employer group health insurance – this is an error rumored to affect more than a million small businesses.
  2. Using non-qualifying “skinny insurance” or “mini-med” insurance – This type of insurance will eliminate one excise tax penalty but not the other. This point only applies to businesses with over 50 employees. This type of insurance eliminates one type of excise tax penalty but not the other type of penalty.
  3. Expecting repeal of ACA or significant future changes – small businesses can’t rely on the news and opinions to run a business.
  4. Paying employees for or reimbursing individual health insurance – rarely should an employer have connection to individual insurance purchased through an exchange or direct from an insurance company.
  5. Not maintaining written documentation of health plans – employees are required to provide some health plan documents and notifications in writing for employees, and employers should maintain of their delivery.

Are there any resources to assist in compliance?

Fortunately, small business compliance is as simple as following a checklist. Download the ACA Compliance Checklist and use it as you file your return. As long as you can check off each item, you should be penalty free in 2015.

More questions about ACA compliance? Contact Bill Schock at, and find out how your small business can be compliant in 2015.

Sections 6055 and 6056 Forms Matrix